How Lenny Lebovich Is Disrupting the Beef Business
PRE Brands founder and CEO Lenny Lebovich, 43, is passionate about his company’s 100% grass-fed beef imported from New Zealand and Australia. But that passion is tempered by pragmatism. Unlike some entrepreneurs, he didn’t go into business as a starry-eyed idealist with little or no knowledge about what it takes to create a winning consumer packaged goods brand. Just the opposite. After graduating from Indiana University’s highly regarded Kelley School of Business and beginning his career as an investment banker on Wall Street, Lebovich spent some time working in the commodity beef business. So, when he was inspired to introduce U.S. consumers to high-quality steaks, ground beef, and specialty beef cuts after enjoying an amazing ribeye steak in Australia several years ago, he had a pretty good idea of what to expect. Still, he says, there were some surprises along the way.

For one thing, getting distribution was even tougher than anticipated. “It’s been challenging to get this into stores,” says Lebovich, “because I think the people in the category aren’t used to what we do and how we do it. But the customers that dip their toes in the water and give us a try universally have expanded us.” PRE, which is based in Chicago, supplies retailers with display fixtures to showcase its premium-priced, vacuum-packaged beef products, and its merchandisers visit stores frequently to conduct product demos and provide merchandising assistance.

Despite the distribution challenges, sales have taken off since the brand’s February 2015 launch and continue to build. “As we have more and more success, I think our sales conversations [with retailers] become easier,” Lebovich observes. “We were the No. 1 fastest-growing company in the beef category last year. … We grew about 460%.” The company’s products are available in chains including the Mariano’s division of Kroger, Giant Eagle, BJ’s Wholesale Club, Heinen’s, Meijer, and the Shaw’s/Star Market division of Albertson’s, among others, as well as through Amazon Fresh, Jet.com, and Peapod.

Although PRE’s value-added products appeal to the kinds of consumers who shop in the natural products and specialty channels, Lebovich and his executive team opted not to go that route, focusing instead on mainstream retailers. “We chose to go after where we thought the majority of consumers would be, and we chose to go where we thought we could deliver a more attractive price to a larger part of the market,” he says.

Even at mainstream retail, PRE products are priced 50% to 100%-plus over commodity beef. “What we’ve learned is that we over-index like crazy with the most valuable shoppers walking into the store,” Lebovich says. “Our shopping baskets are multiple times the size of the average shopping basket. The consumers that buy us tend to buy other premium products that tend to be pretty high-margin for retailers.”

According to Lebovich, beef sales typically represent 5%–7% of a retailer’s total sales, and all animal protein combined often approaches 20%, so it’s a critically important category. What’s more, he continues, “It [the meat department] is often the reason that a consumer chooses one retailer over another—their perception on perishables, but particularly meats. So, if you’re going to try to change what you are in the consumer’s mind as a retailer—and I think everybody in retail today is trying to figure out what their future looks like—perishables is where you most need to do it. And meat is a really great place to start. And we represent kind of a game changer in that category.”

Lebovich is confident that the brand’s early successes will breed more of the same. “We have more and more data, and as we’re viewed as a go-to solution as opposed to a risky new idea in the industry, I think that maybe we [will] reach a tipping point and we can accelerate further.”

ENTREPRENEUR TALK: Lenny LebovichEssential Entrepreneurial Skill: “I’d say that a core competency of a start-up has to be solving problems and solving the right problems and solving them well and solving them quickly.”

Secret to Success: “The harder, the problem you solve, the more valuable the business you’re probably creating.”

One Hard Truth: “I understood a lot about this industry, and that understanding helped us avoid a lot of the mistakes that one might make if they knew nothing. But there’s still a lot of learning, a lot of things that are different than you expect them to be.”